Howard Farmer v. Arabian American Oil Company

LUMBARD, Chief Judge

(with whom Judges MOORE, FRIENDLY, KAUFMAN and MARSHALL concur).

This appeal presents a question of importance in the administration of civil litigation, namely the power of a district judge to tax costs for the transportation of witnesses to trial from places without the judicial district and more than 100 miles distant from the place of trial. We hold that costs for such travel may be allowed and in the light of that holding we examine the rulings with respect thereto made by the district judges at the two trials of Farmer’s suit for an alleged breach of his contract of employment.

Howard Farmer instituted this litigation on May 24, 1956, in the Supreme Court, New York County, against the Arabian American Oil Company (Aramco). Aramco removed the cause to the United States District Court for the Southern District of New York, there being diversity of citizenship. A trial was had before Judge Palmieri and a jury, which terminated in a jury disagreement. Thereafter, Aramco’s motion for a directed verdict was granted, 176 F.Supp. 45 (1959), but this determination we reversed, 2 Cir., D.C., 277 F.2d 46, cert. denied, 364 U.S. 824, 81 S.Ct. 60, 5 L.Ed.2d 53 (1960), necessitating a second trial. Farmer failed to comply with an order directing him to post security for costs, and the action was dismissed. We again reversed, holding that the order constituted an abuse of discretion, as it effectively precluded the plaintiff from prosecuting his action because of the expense of procuring the bond, 2 Cir., 285 F.2d 720 (1960). A second jury trial, before Judge Weinfeld, resulted in a verdict for the defendant. The Clerk taxed costs of $11,900.12 which on Farmer’s motion were reduced by Judge Weinfeld to $831.-60, and from this order Aramco appeals. After the appeal was heard by a panel consisting of Judges Lumbard, Smith and Hays, the active judges of this court agreed that the appeal should be considered in banc.

Some earlier decisions cast doubt on the appealability of a judgment solely for costs. See Newton v. Consolidated Gas Co., 265 U.S. 78, 44 S.Ct. 481, 68 L.Ed. 909 (1924); The James McWilliams, 49 F.2d 1026 (2 Cir. 1931); Walker v. Lee, 71 F.2d 622 (9 Cir. 1934). However, Rule 54(d) of the Federal Rules of Civil Procedure now governs the granting of costs. It states: “Except when an express provision therefor is made either in a statute of the United States or in these rules, costs shall be allowed as of course to the prevailing party unless the court otherwise directs * * The effect of this provision, combined with 28 U.S.C. § 1920,¹ is to make the right to statutory costs subject to judicial discretion. Within the careful statutory scheme, no hint of intent to create an element of uncontrolled discretion can be found, nor is one lightly to be implied. Furthermore, it is unquestionably true that the portion of the judgment relating to costs may be reviewed on appeal, for abuse of that discretion, if other issues are also raised. See, e. g., Chemical Bank & Trust Co. v. Prudence-Bonds Corp., 207 F.2d 67 (2 Cir. 1953), 347 U.S. 904, 74 S.Ct. 429, 98 L.Ed. 1063 (1954); Chicago Sugar Co. v. American Sugar Refining Co., 176 F.2d 1 (7 Cir. 1949), cert. denied, 338 U.S. 948, 70 S.Ct. 486, 94 L.Ed. 584 (1950). We see no reason why we should not hear an appeal from this element alone. It is surely a final judgment within the meaning of 28 U.S.C. § 1291. See Donovan v. Jeffcott, 147 F.2d 198 (9 Cir. 1945). We hold that when, as here, the question is not whether the district judge should have allowed or disallowed particular items of costs, but is rather whether he exceeded, and therefore abused, his discretion, a judgment solely for costs is appealable. Lichter Foundation, Inc. v. Welch, 269 F.2d 142 (6 Cir. 1959); Kemart Corp. v. Printing Arts Research Laboratories, 232 F.2d 897 (9 Cir. 1956); Prudence-Bonds Corp. v. Prudence Realization Corp., 174 F.2d 288 (2 Cir. 1949); Harris v. Twentieth Century-Fox Film Corp., 139 F.2d 571 (2 Cir. 1943); 6 Moore, Federal Practice 1309 (1953).

In taxing costs, the Clerk included substantial amounts for air transportation of defendant’s witnesses from as far away as Saudi Arabia to the place of trial. Judge Weinfeld reduced these assessments to a uniform allowance of $16.00 per witness, or the equivalent of 100 miles each way at $.08 per mile. Judge Weinfeld took this action as an exercise of judicial discretion, choosing not to rely upon the 100-mile limitation frequently imposed by the federal courts on their own power to assess transportation costs of witnesses brought from without the judicial district in which the'trial court is sitting. We must therefore first determine the applicability of the 100-mile limitation. We hold the 100-mile rule inapplicable as a restraint upon the exercise of judicial discretion in the assessment of transportation- costs for witnesses brought to trial.

The 100-mile rule appears to have evolved out of the limitation upon the subpoena power of a federal court to an area within the judicial district or 100 miles from the place of trial. See Federal Rules of Civil Procedure 45(e). There is not a shadow of a suggestion, however, in 28 U.S.C. § 1920(3), which provides simply that “[f]ees and disbursements for * * * witnesses” may be taxed as costs, that the court’s power to issue a subpoena has anything whatever to do with' what constitutes a recoverable disbursement for a witness. Indeed, 28 U.S.C. § 1821 as amended in 1949 provides clear authorization for the taxation of the actual expenses of travel for witnesses who come from afar. Section 1821 expressly provides that in lieu of the usual mileage allowance, actual travel expenses shall be allowed to witnesses who are required to travel between “the Territories and possessions, or to and from the continental United States.” The great bulk of judicial authority supporting the 100-mile rule is to be found in cases decided prior to the enactment of the 1949 amendment which added the above-quoted provision. Friedman v. Washburn Co., 155 F.2d 959 (7 Cir. 1946); Vincennes Steel Corp. v. Miller, 94 F.2d 347 (5 Cir. 1938). The vast majority of the more recent cases which approve the rule do no more than cite other cases, without considering the reasons which might lend support to it or weigh against it. Those cases decided subsequent to the 1949 legislation give it.little or no attention. E. g., Ludvigsen v. Commercial Stevedoring Co., Inc., 228 F.2d 707 (2 Cir.) (dictum), cert. denied, 350 U.S. 1014, 76 S.Ct. 660, 100 L.Ed. 874 (1956); Kemart Corp. v. Printing Arts Research Laboratories, Inc., 232 F.2d 897 (9 Cir. 1956); Perlman v. Feldmann, 116 F.Supp. 102 (D.Conn. 1953), reversed on other grounds, 219 F.2d 173, 50 A.L.R.2d 1134 (2 Cir.), cert. denied, 349 U.S. 952, 75 S.Ct. 880, 99 L.Ed. 1277 (1955). Moreover, in some recent cases in the lower courts, the 100-mile rule has been flatly rejected. Bennett Chemical Co. v. Atlantic Commodities, Ltd., 24 F.R.D. 200 (S.D.N.Y. 1959); Maresco v. Flota Mercante Grancolombiana, S.A., 167 F.Supp. 845 (E.D.N.Y.1958); Bank of America v. Loew’s International Corp., 163 F. Supp. 924 (S.D.N.Y.1958).

Whatever the merits of the prior judicial rule, the Congress has not given any compelling evidence demonstrating an intention that it be continued. The reason for the addition of an express provision for actual travel expenses in the case of overseas travel is stated in the letter of the Assistant to the Attorney General, appended to and made part of the report of the Seriate Committee discussing the 1949 bill: “For overseas travel, it is recommended that witnesses be allowed their actual expenses at the lowest first-class rate available. There have been times when witnesses have been required to engage in such travel at a personal financial sacrifice.” S„ Rep. No. 187, 81st Cong. 1st Sess., reprinted in 1949 U.S.Code Cong.Serv. pp. 1231, 1233.

The 100-mile rule finds as little support in reason as it does in the statutes. Whether a witness comes into court voluntarily or under the compulsion of a subpoena, he comes at the behest of the party for whom he appears as a witness. Either way, he serves the interest of the court in arriving at a just determination of the controversy. See United States v. Sanborn, 28 F. 299 (C.C.D.Mass.1886) (opinion by Mr. Justice Gray). The fact that a subpoena does not issue because the witness is outside the reach of the court has nothing to do with the problem of how to allocate the cost of his appearance at the trial.

Nor can the 100-mile rule be defended as an allocation of the expenses of litigation in keeping with the practice of our courts to let such expenses fall on the party who incurs them. Fees for legal services are usually the largest single expense of litigation. In most cases, the prevailing party must pay such fees himself, even if he has come into couid; only to defend against an unjust accusation. There is no reason to extend this practice further. Certainly there is no reason to extend it by the curious means of limiting the recovery of travel expenses to 100 miles, a figure which may bear no relation to the distance actually traveled. As this ease well illustrates, a 100-mile limitation is an anachronism in a day when the facility of world-wide travel and the development of international business make the attendance at trial of witnesses from far off places almost a matter of course.

It has been suggested that the 100-mile rule serves a salutary purpose insofar as it erects some protection for the impecunious litigant who might otherwise hesitate to institute litigation in the fear that, if unsuccessful, he may bear the burden of transporting the defendant’s witnesses. It seems plain, however, that any such solicitude for the rule is ill-founded. There may be cases in which the fair administration of justice requires that the losing party not. be taxed to the full extent of the cost of producing witnesses for the other party. But it surely cannot be said that, there will never be a case in which the losing party, in the interest of justice, should bear such costs. For example, had the positions in this case been reversed and Farmer been forced to produce witnesses from Saudi Arabia in order to defend against unjust charges of Aramco, one could hardly assert the justice of requiring Farmer to pay the costs of producing his witnesses himself, or risk the failure of his defense. Indeed, adherence to a rigid limitation on the taxation of travel expenses is more likely to work to the detriment of litigants with meager financial resources than a rule which leaves the allocation of costs to be determined according to the circumstances of each case.

There is no reason why a judge should be thought less capable of determining a proper allocation of the costs of witnesses’ travel expenses than he is of allocating other expenses of trial, such as transcripts, which are committed without artificial limitation to the discretion of the trial judge. We do not hold that the full measure of travel expenses must be taxed against the unsuccessful party in each and every cause; we merely affirm the power of a federal district judge to exercise his discretion in the allocation of such costs. In exercising that discretion, the trial judge may well take account of the relative financial resources of the parties and the ability of the unsuccessful litigant to bear the costs of the litigation, where the action has been prosecuted in all good faith. It is only under such a rule that the impecunious litigant may be assured of his right to present effectively his case to judge and jury.

Concluding that the 100-mile rule is inapplicable, we turn to the particular items of costs taxed in the case at bar. At the first trial, Judge Palmieri allowed travel expenses totalling $3,715.21 for transportation of six witnesses, three of whom came from Saudi Arabia. For reasons stated below, we think that, except as to the travel expenses of witnesses Page and Swanson, totalling $2,-064.00, it was within the discretion of Judge Palmieri to allow these expenses, and that his exercise of discretion should not have been disturbed. As the judge who presided at the first trial, Judge Palmieri had the greater opportunity to assess the necessity of particular costs incurred in defense of the action before him. This circumstance, considered in the light of the sensitive nature of the problems presented when one district judge is asked to pass upon the exercise of discretion by another, makes it inappropriate for a district judge to undertake an independent determination de novo of the costs allowed at a prior trial.

The plaintiff alleged that he had been hired to work as an ophthalmologist at the defendant’s hospital in Saudi Arabia, and that he had been wrongfully discharged. In addition to disputing the terms of the employment contract, the defendant contended that the plaintiff had been discharged for just cause, specifically that he had performed an operation without first obtaining the results of certain tests, in violation of an express rule of the hospital and accepted standards of medical practice. The plaintiff’s explanation for his discharge was that he had insisted upon truthfully reporting alleged findings that many American employees of the defendant in Saudi Arabia were contracting trachoma, a tropical disease which leads to blindness. He claimed that his superiors had sought to intimidate him into suppressing his findings.

The witnesses whose travel expenses are in dispute gave evidence relating to the conflicting accounts of the plaintiff’s discharge. There is no question that these witnesses had information which was essential to disprove the plaintiff’s claims and establish the defense. Judge Weinfeld determined, however, that in view of the heavy expense of producing them in court the defendant should have relied on written testimony taken in advance $i trial or, at least, should itself bear the cost of the witnesses’ appearance at trial. We cannot agree.

It is difficult to imagine a more serious charge against an employer than that he suppressed evidence that employees ran the risk of contracting a serious disease. In such circumstances, the defendant could not possibly have been expected to adopt less than the most effective means of disproving the plaintiff's charges. We have had occasion in the past to note the importance of “live” witnesses in a trial before a jury. See Arnstein v. Porter, 154 F.2d 464, 469-470 (1946). Moreover, in the first instance it is for the judge before whom the trial is had to gauge the necessity for transporting witnesses to the place of trial and to determine the propriety of assessing costs for such transportation against the unsuccessful litigant. We believe Judge Weinfeld should have deferred to Judge Palmieri with respect to those costs incurred in the first trial before him, just as we defer to him with respect to the costs of the trial at which he presided.

It appears, however, that two of the witnesses, Page and Swanson, occupied otherwise empty space in company planes on regularly scheduled flights to and from Saudi Arabia, so that as to them there was no actual travel expense incurred by the company and none should have been allowed.

Judge Palmieri allowed costs of $361.55 for transcripts of pretrial hearings, examinations before trial, and depositions. Judge Weinfeld reduced this amount to $76.05. Considering the importance of pretrial hearings and the discovery procedure under the Federal Rules, we cannot say that it was an abuse of discretion for Judge Palmieri to conclude that these costs were necessary elements of preparation for the first trial, and then to allow them. Similarly, we find it within Judge Palmieri’s discretion to allow $1,812.30 for stenographer’s fees incurred in compilation of the daily minutes of trial, as well as $180.02 for photostatic copies of certain bulky exhibits, as he found both of these items necessary to the proper conduct of the trial. See 28 U.S.C. §§ 1920(2), 1920(4). We hold that it was an abuse of discretion in view of Judge Palmieri’s findings as to their necessity, for Judge Weinfeld to disallow them.

We sustain in its entirety Judge Weinfeld’s determination as to the costs incurred in the trial held before him. Although there are those of us who would have allowed traveling expenses beyond the 100-mile limit had the trial been before us, we cannot say that Judge Weinfeld abused his discretion in limiting costs for transportation of witnesses to the second trial, held before him, to a uniform allowance of $16.00 per witness.

We therefore reverse and remand with instructions to allow the costs as taxed by Judge Palmieri on the first trial, $6,601.-08, less $2,064.00 taxed for the travel of Page and Swanson, or a total of $4,537.08 for the first trial, plus those items taxed by Judge Weinfeld on the second trial.

1 . Section 1920 provides:

“A judge or clerk of any court of the United States may tax as costs the following: * * *

“ (3) Fees and disbursements for printing and witnesses.”